UPDATE: Beanie Babies Creator Pleads Guilty to Tax Evasion

CHICAGO - Beanie Babies creator, Ty Warner, plead guilty to tax evasion in a Chicago federal court Wednesday.

Warner was originally charged with tax evasion after U.S. authorities found that the Ty Inc. owner failed to report income earned in a secret offshore accounts in Switzerland, one of which was filed under the false name, Molani Foundation.

He has agreed to pay $53.5 million in penalties for not disclosing the existence of these foreign accounts to the government, according to a Chicago Tribune report. U.S. taxpayers are required to report and pay taxes on any foreign accounts exceeding $10,000. Prosecutors said that Warner failed to pay taxes for nearly $5.6 million and never reported $24.4 million in income from 1999 through 2007, according to the report.

"When I signed those returns, I knew those moneys were missing," Warner told U.S. District Judge Charles Kocoras. "It was not accurate. I apologize for my conduct. It's a terrible way to meet you." He added, "I'm pleading guilty because I am guilty."

Warner will be officially sentenced on January 15, 2014 and may face up to five years in prison.

Warner agreed to settle a federal tax evasion last month, according to a previous report. He was originally charged on Sept. 18, for failing to report and pay taxes on income earned in a secret offshore account, which he started with Swiss bank UBS in 1996, according to the report. He then moved it to another Swiss bank, Zürcher Kantonalbank, in 2002, under the Molani Foundation name.

His defense lawyer, Gregory Scandaglia, of Scandaglia & Ryan in Chicago, said that Warner "accepts full responsibility for his actions," and that Warner attempted to file an Offshore Voluntary Disclosure Program for people with undeclared offshore accounts with the IRS in 2009 but was rejected. "He came forward voluntarily, unaware that he might be under government scrutiny," said Scandaglia.

The 69-year-old Beanie Babies creator started Ty in 1985 and soon had an empire on his hands when the collectible dolls took off in the 1990s, which made Warner a billionaire.

Warner's case is the latest in some high-profile cases of undeclared offshore accounts, including ones that involve UBS. The Swiss bank admitted to helping American taxpayers hide money abroad in 2009, gave U.S. authorities more than 4,000 names and paid a $780 million penalty to avoid any criminal charges. The Internal Revenue Service has increased its crack down on unreported offshore bank accounts since 2009 and has since prosecuted 68 U.S. taxpayers, three Swiss banks and dozens of bankers, lawyers and advisers.

Tax evasion can carry a sentence of up to five years in prison and a $250,000 fine.

Jack Townsend, a lawyer who tracks offshore account cases, told the Tribune that this could be the largest penalty ever publicly reported.